Business cycle survey - February 2006

Balance of composite confidence indicator (indicator of economic sentiment) increased slightly (by 0.1 point) in February 2006 compared to the previous month. Balance of business indicator increased by 0.7 point. Balance of consumer confidence indicator decreased by 2.3 points. Compared to February 2005, composite confidence indicator balance increased by 1.8 points, business confidence indicator balance increased by 0.6 point and consumer confidence indicator balance increased by 6.6 points.
In industry, the confidence indicator balance did not change month-on-month and in the year-on-year comparison it is 2.3 points down on February 2005. In construction, the confidence indicator balance increased by 2 points m-o-m, however it is 2.5 points down on February 2005. In trade, the confidence indicator balance increased by 5.7 points and it is 5 points up y-o-y. In selected services, the confidence indicator balance increased by 0.6 point m-o-m and is 4.3 points up y-o-y.

In industry, favourable assessment of the current economic situation prevails in February. Assessment of both total and external demand increased compared to previous month. For next three months, respondents expect seasonal slowdown of production activity and unchanged development of employment. Stable price development is expected by 77.8% of respondents. For next three months, respondents expect improvement of their economic situation and there are the same expectations for next six months.

In construction, favourable assessment of current economic situation continues in February. In relation to an expected increase in the demand, respondents expect an increase in the number of employees in next three months. Predominantly, the respondents anticipate no changes in prices; however, 30.2% of respondents will increase their prices. Construction work is secured for the next 9 months, respondents in construction say. Expectations of economic situation are favourable for next six months.

Among respondents engaged in trade, favourable assessment of current economic situation continued in February. For next three and six months, expectations of favourable development of economic situation prevail, which will also cause increased demands on suppliers. 67.9% of respondents expect stable development of the number of employees; sale prices should not rise (87.1% of respondents expect no changes in prices).

In selected services, respondents expect favourable development of demand in next three months (38.1% of respondents expect a rise, 59.5% no changes and only 2.4% a drop). Respondents expect employment to increase; prices of services should rise slightly. Assessment of economic situation is favourable; however, the expectations for next three as well as six months are cautious.

The survey taken among consumers in February indicates that they expect deterioration of both the overall economic situation (balance down by 2.4 points) and their own financial situation (balance down by 1.9 points). Compared to January 2006, the percentage of consumers expecting higher unemployment increased (balance up by 5.6 points). The percentage of the respondents going to save money increased slightly. In February, the consumer confidence indicator decreased by 2.3 points compared to the high value in January, however in the y-o-y comparison it is 6.6 up.

Note

Contact: Marie Hörmannová, phone (+420) 274052049,
e-mail marie.hormannova@csu.gov.cz
Data source: CZSO business survey, GfK Praha consumer survey
End of data collection: 20 February 2006
End of data processing: 23 February 2006
More information at: 1201-05 Business Cycle Survey in Enterprises of Industry, Construction,
Trade and Selected Services

Methodological explanatory notes :

Since January 2006 the Composite confidence indicator (Economic sentiment indicator) is in compliance with the EU methodology presented as a weighted average of seasonally adjusted confidence indicators in industry, construction, trade, selected services and consumer confidence indicator. Business confidence indicator is a weighted average of seasonally adjusted confidence indicators in industry, construction, trade and selected services.

Since January 2006, due to the inclusion of confidence indicator in selected services, a new weighting system is being used : confidence indicator in industry has 40% weight, in construction and trade it is 5% each, in services 30% and consumer confidence indicator has 20% weight. Indicators are presented as basic indices, with the average of 2005 as a base.

Time series of composite and business confidence indicators are recalculated by the new weighting system – back to May 2002 (the beginning of the business cycle survey in selected services). Whole time series of basic indices are then recalculated to the average of 2005; data are comparable.